By Stephen C. Stokes, CPA, president, Stokes & Company CPAs
For small businesses, effective tax planning is something that happens year-round, not just at “tax time.” But during a year like the one we’ve had, it’s often difficult to think about anything beyond keeping the lights on.
Businesses large and small have all been impacted by COVID-19 in various ways. While some have increased their revenue and profits, others have been far less fortunate. If your business has taken a hit, then now is the time to discover new opportunities to grow — and possibly reinvent — your business to succeed in the face of continued changes.
Year end is the perfect time to do this comprehensive review, from preparing for annual tax filing to planning for your business’s future.
A solid financial plan allows for you to increase working capital and reduce debt. But how do you get there?
Begin with a cost analysis. Look at your monthly and weekly financial statements to figure out where your money is going, and then record it in detail. From there, you can negotiate to reduce terms on fixed costs, modify long-term debt terms, and refinance debt to increase cash flow. If your PPP loan will not be forgiven, you can convert the two-year loan into a 10-year PPP loan.
Lastly, if your analyses show that revamping billing and credit terms for your customers would improve your financials, don’t be afraid to do it.
Marketing and sales pricing
When your marketing and sales pricing align, you’ll be able to hold on to loyal customers while also attracting new ones. Set yourself up to achieve this by:
- Communicating with and staying close to your clients
- Studying your competition for mergers, acquisitions and ideas
- Increasing marketing to gain market share
- Increasing pricing when customer supply is reduced
- Anticipating new customer purchasing habits
Business management strategies
Regardless of how happy your customers are today or how pristine your financials look at the end of the month, your business needs a strategic framework in order to prosper going forward.
- Hire well. Hire great people who are available now.
- Level up. Our world functions digitally, and customers won’t wait for businesses that can’t keep up.
- Generate more working capital from partner investments.
- Plan for the worst. Create a plan to stay afloat in case of forced closures.
- Analyze and create. Update your business strategy based on your assessment of new business regulations related to your industry and an in-depth SWOT analysis.
Stephen Stokes is a certified public accountant and president of Stokes & Company CPAs, based in Greenville. Stokes & Company CPAs specializes in monthly accounting and payroll services for business clients as well as individual and business tax planning and preparation. Stokes & Co specializes in monthly accounting, tax planning and advisory services for businesses as well as individual tax planning and preparation.